Commentary Magazine


The Bloomberg Bubble Bursts

In the narrative crafted by Michael Bloomberg’s public-relations team throughout the first nine years of his mayoralty, he was the fabulously successful businessman who saved New York’s economy after the 9/11 attacks and then went on to master urban governance without breaking a sweat. Along the way, we have been told relentlessly, Bloomberg became the nation’s leading education reformer, responsible for reducing by half the black-white achievement gap, while also launching lifesaving public-health and environmental initiatives.

And through it all, so the narrative went, he remained above the ugly partisan fray. A lifelong Democrat who turned Republican to run for mayor on the cusp of his 60s, he quickly transcended both parties and established himself as a true independent. And so, his consultants hinted, the nation’s emblematic “no labels” politician might be available for the highest office in the land so that he could help repair the politically fractured nation as he has repaired New York City.

But all that was before the Christmas 2010 snowstorm, when this protean genius of 21st-century politics somehow forgot the first rule of New York City governance: the mayor must make sure the streets are cleared before he sets upon saving the world. As a powerful blizzard bore down on the city, Bloomberg, as was his weekend custom, was relaxing at his sunny Bermuda hideaway. Steven Goldsmith, a new recruit as deputy mayor for operations owing to his efforts at “reinventing government” during his own innovative mayoralty in Indianapolis in the early 1990s, was in D.C. for the weekend and declined to return. Howard Wolfson, another deputy mayor, was vacationing in London. Bloomberg’s principal deputy, Patricia Harris, was also out of town at an undisclosed location.

The handful of agency heads left in charge of the city’s storm response neglected to declare a snow emergency, which would have allowed them to use measures like towing cars off busy streets to prepare for the disruptions. By the time Bloomberg flew back to the city on his private plane the next day, a disaster was unfolding on the streets. He then added insult to injury by urging New Yorkers—millions of whom could not get off their own blocks in the outer boroughs—to shrug it off and take in a Broadway show. When reporters asked Bloomberg to account for his whereabouts as the storm began, he replied that this was his “private time” and thus no one’s business.

The outrage surging up in the city’s neighborhoods was so palpable that even Bloomberg’s most reliable boosters began making fun of the great manager’s performance. When yet another two inches of snow hit the city a week later, the New York Post ran a mock “Memo to Mayor Mike” on its front page, reminding Bloomberg that it was “going to snow today.” After that second snow, the front page of the Daily News proclaimed: “GREAT JOB MIKE! Mayor triumphs over storm! (All 2 inches of it!)” The mayor’s approval rating plummeted to 34 percent, according to the Marist poll. The rumors planted in the media about his running for president finally, and mercifully, ceased.

It is tempting to depict Michael Bloomberg’s reversal of fortune in his third term in office—a term he secured by muscling through a change in the city’s term-limits law before spending $150 million to win only 50.7 percent of the vote—with hubris metaphors drawn from classical tragedy. But this assumes there was glory before the fall. In reality, there never was greatness. There have been no lasting fiscal or education reforms.

The story of Bloomberg’s mayoralty is this: there is no there there.

It is now abundantly clear that the myth of Bloomberg’s accomplishments was the result of two forces: his own immense wealth and the city tax dollars generated by the stock-market surge of the 2000s. Both sources of revenue, private and public, were used to co-opt and silence his opposition and thereby allow the glamorized portrait of an indispensable manager and the guardian of the public purse to be drawn without countervailing criticism.

An objective accounting of Bloomberg’s tenure reveals the many ways that Bloomberg’s standing as New York’s richest citizen actually undermined New York’s democracy, even as the city’s fiscal health and essential infrastructure deteriorated.

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How It Began to Go Wrong

While running for office in 2001 and after being sworn in as mayor in 2002, Bloomberg pledged to be the quintessential managerial mayor. He promised to resolve the city’s budget difficulties without raising taxes and insisted there would be no city support for any new stadiums until the economy—suffering through a recession owing to the post-9/11 aftershock—had recovered. He also said he would negotiate new union work rules for a more efficient New York. And he insisted that he would lead the way in rebuilding Ground Zero.

Bloomberg reversed himself on each of those commitments. He ceded responsibility for the Ground Zero rebuilding to then-Governor George Pataki and the Port Authority of New York and New Jersey, and then stayed out of it while they spectacularly mishandled every aspect of the reconstruction. Later he announced his support for a new stadium for the New York Jets on the Far West Side of Manhattan.

Because of the city’s damaged financial position in the wake of 9/11, Bloomberg reneged on his promise and instead proposed a 25 percent property-tax hike while signing public-sector union contracts that boosted wages well above inflation without receiving work-rule changes in return. This was fitting, he believed, for a metropolis that, he said in 2003, “isn’t Wal-Mart. It isn’t trying to be the lowest-priced product in the market. It’s a high-end product, maybe even a luxury product.” You want to live in and around a luxury product? You have to pay more.

Bloomberg maintained the policing achievements that had changed the city so dramatically for the better during the tenure of his predecessor, Rudy Giuliani. And he had some modest successes of his own in the early years. He imported from Chicago a 311 system for quicker access to city services and handled a brief blackout in 2003 well. New York recovered from 9/11 more quickly than expected. By the second quarter of 2003, Wall Street profits were beginning to rebound, and the city was emerging from the worst of its economic woes.

But rather than holding the line on spending and allowing the city’s coffers to recover properly, Bloomberg simply reversed course and kept spending while keeping tax rates high. Even so, he chose to borrow $1.5 billion to help cover the city’s operating expenses. Not since the catastrophic near-bankruptcy of the 1970s had the city borrowed to cover day-to-day costs.

The aftermath of 9/11 was an extraordinary lost opportunity for the city. It could have been a moment when, in the name of shared responsibility for bringing the city back to life, spiraling labor costs could have been addressed. Public-sector employees working for the city labored but 35 hours a week and contributed nothing to their own health-insurance premiums. Rather than take up the matter, Bloomberg simply retained the status quo when it came to negotiating with the city’s most important voting bloc. A routine was established: Bloomberg would start out by talking tough about how new contracts could be paid for only with increased productivity, and in response unions would reply in a patented and choreographed “anger” mode. This false confrontation would be followed by a renewal of the old contracts and their counterproductive work rules with a few cosmetic improvements. Thus the need for new borrowing.

Bloomberg was, at times, rescued from his own destructive policies by events beyond his control. In 2004, he became obsessed with plans for a new football stadium, or a “multi-use” facility in Manhattan, as part of a quixotic bid for the 2012 Olympics. It was unclear, given the checkered financial fallout from cities that had previously hosted the Games, just what New York stood to benefit from securing such a questionable honor. New York was already the most visited tourist destination in the United States and fourth or fifth (depending on whom you ask) worldwide. Nonetheless, as the centerpiece of the Olympic bid, Bloomberg proposed to bequeath the Jets’ ownership a billion-dollar parcel for a fifth of that price. The unpopular push for a West Side stadium left Bloomberg, whose  poll numbers had fallen to as low as 31 percent, with a hard road to re-election.

The stadium albatross was lifted from Bloomberg’s political neck when, despite his best efforts, it was blocked by the Democrats in the state assembly. Meanwhile, thanks in part to the Bush tax cuts, Wall Street had come roaring back, not only softening the blow of Bloomberg’s foolish fiscal policies but also refilling the city coffers.

To cap off this sudden positive turn in Bloomberg’s political fortunes just as he was about to run for a second term, Bloomberg was handed a dream opponent for the 2005 general election, Bronx Borough President Freddie Ferrer. Together with his ally, the rabble-rouser and riot-inciter Al Sharpton, Ferrer had effectively delivered the 2001 election to the political neophyte Bloomberg by undermining Bloomberg’s Democratic rival, Mark Green, to whom Ferrer had lost a primary runoff.  In the general election, Ferrer worked with Sharpton to undermine Bloomberg’s opponent by suggesting that Green, a veteran New York City left-winger, was a covert racist. The contrived brouhaha suppressed Green’s minority vote and, almost by accident, Bloomberg became the mayor.

In 2005, Sharpton played a much different role. He undercut Ferrer, who had counted on a black-Latino alliance to carry the day, even as Ferrer repelled moderate white voters with his talk of returning to the glory days of pre-Giuliani New York. And despite a liberal campaign-spending law intended to level the playing field, Ferrer was buried beneath an avalanche of Bloomberg’s money. The mayor’s spending on political consultants alone was greater than the cost of Ferrer’s entire hapless campaign. It ended up being a no-contest election for which Bloomberg effectively paid more than $100 per vote. But his 20-point margin of victory pumped air into the mayor’s trial balloons about running for national office, which have been repeatedly floated ever since.

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The Second Term and the Schools Fiasco

Bloomberg’s second term was strewn with grotesque management failures. His administration’s one major responsibility, after handing off most of the 9/11 rebuilding, was safely dismantling the remains of the Deutsche Bank building, a toxic ruin on the edge of Ground Zero. His staff handed over the cleanup and demolition to a Mob-connected company previously blocked from doing business with the city. Two firemen died horrible deaths as a result of the failure of the fire department to inspect the mismanaged site. The mayor talked incessantly about the “accountability” he was bringing to city government, but he never held his fire commissioner to account for the avoidable disaster at the Deutsche Bank site.

But nothing illuminates the vacancy of Bloomberg’s mayoralty more than the false narrative that depicted him as America’s “education mayor.” At the time he took office, a complex set of rules gave the mayor relatively little control over public education in the five boroughs and disseminated authority to such an extent that no one could be held responsible for the parlous condition of the schools. For years, Rudy Giuliani had pressed for mayoral control but was denied it. As a candidate for mayor in 2001, though, Bloomberg offered hardly a hint that he regarded education as a critical issue or even that he believed New York’s mayor could do much about the condition of the city’s schools.

Once settled in at City Hall, Bloomberg looked across the river to downtown Brooklyn and saw a big, fat inviting target. It was 110 Livingston Street, the Board of Education’s central headquarters, notorious for its bureaucratic paralysis and recurring corruption scandals. Bloomberg stepped into the breach and made the city the same offer Giuliani had: Give me full authority over the school system and then judge me by the results. Lacking Giuliani’s baggage on the matter, Bloomberg had a leg up. He waged an effective political and public-relations campaign to convince the state legislature to eliminate the Board of Education and write a new school-governance law for the city. Education became a mayoral agency.

At the signing ceremony for the mayoral-control bill in June 2002, Bloomberg heralded a new era of accountability. He promised the taxpayers that he would now deliver a bigger education bang for their bucks. He cleared thousands of bureaucrats out of 110 Livingston Street, sold off the musty old building, and installed a few hundred essential central-office officials at the refurbished Tweed Court House less than a hundred yards from City Hall.

He then hired Joel Klein, the former head of the Justice Department’s antitrust division in the Clinton administration, as the new schools chancellor. After a six-month review of what was working in the schools and what wasn’t, the mayor announced his reform program (called Children First) at his Martin Luther King Day speech in Harlem on February 20, 2003. Bloomberg hit all the right notes, combining a commitment to fiscal restraint with what seemed like an empirically grounded approach to curriculum and classroom instruction.

Bloomberg said that the $12 billion the city was then spending on the schools should be enough to provide a decent education for all children because he and Klein were now going to “make sure we get the most value for the school system’s dollar.” Bloomberg also seemed to be rejecting the progressive-education approach to curricular issues and classroom pedagogy and casting his lot with education traditionalists. Thus he announced that there would now be a standardized curriculum for all schools dictated from City Hall, including “a daily focus on phonics” in the early grades.

But soon it became clear that, in this area as in others, it was necessary to pay attention to what this mayor did rather than what he said. Almost immediately, on the issue of classroom instruction, Bloomberg and Klein chose to defer to the progressive old guard within the school system. Lucy Calkins of Columbia Teachers College, one of the country’s leading progressive educators and a fierce opponent of the phonics approach to reading, was given a leading role in designing reading and writing instruction for most schools (to a tune of more than $10 million in consultant contracts).

Bloomberg also began dipping deeper into the city treasury for more and more tax dollars for the schools. From fiscal 2003 to 2011, the education budget grew from $12.7 billion to $23 billion annually—almost a 70 percent increase in inflation-adjusted dollars. Most of the money was paid out in 43 percent across-the-board teacher-salary increases in just the first six years of Bloomberg’s tenure. He also added more than 4,000 teachers to the payroll, reaching 80,000—one teacher for every 13 students in the system. But the mayor who prided himself on his business acumen in managing the city’s workforce obtained almost nothing in return from the United Federation of Teachers (UFT) for this unprecedented bonanza.

Indeed, the purpose of the extra spending could not have been to improve student performance, since he said very plainly that he didn’t believe there was any connection between the two. Rather it was to shore up his political prospects and help make his reputation as the nation’s “education mayor.” Instead of insisting on changes in teacher-compensation packages that might have reduced the city’s long-term pension and health-care costs, Bloomberg cashed in his chips in the coin of either direct political support from the United Federation of Teachers or its calculated neutrality.

For the last half of the decade, Bloomberg and Klein dominated the national education-reform debate. They toured the country touting their signature reforms, including assigning letter grades to schools and bonuses to teachers and principals as powerful incentives for improving student-learning outcomes. The indisputable evidence, they claimed, was in the spectacular gains by city students on the state’s annual reading and math tests in grades 3 through 8. For example, in just two years the percentage of students passing the math tests went from 54 percent to over 82 percent (an unheard-of gain in the annals of education).

From 2005 to 2009, Bloomberg called press conferences to celebrate the ever-more-spectacular test-score increases. At those events, the union president, Randi Weingarten, stood next to the mayor nodding in approval, even though she would confide to associates that the scores were likely inflated. Bloomberg and Weingarten each had their own reasons to hype the test scores: Bloomberg to boost his national profile and Weingarten to lay down a marker for yet another series of teacher pay increases.

The extraordinary teacher-salary increases bought Bloomberg the union’s blessing for extending the mayoral-control law in the state legislature in the summer of 2009. The union also gave Bloomberg a pass when he brazenly succeeded in overturning a term-limits law that had been written into the city’s charter so he could run for a third term (the move also overturned term limits for the city council that voted in favor of repeal). Later that year, the UFT remained neutral as Bloomberg faced off for re-election against Democrat William Thompson. Bloomberg won with a bare majority; a shift of 50,000 votes would have tipped the race to Thompson. The 43 percent salary increases did little for student achievement, but it turned out to be a shrewd political investment for the mayor.

In 2009, during that third bid for office, the Bloomberg education department gave more than 90 percent of the schools A’s or B’s on their progress reports. The test-score increases, Bloomberg argued, proved that his administration had found the silver bullet of reform that could lift achievement for all American students. And in testimony before a congressional committee, Bloomberg claimed that the black-white academic-achievement gap—a conundrum that had stumped education reformers for decades—had been halved in New York City in just five years.

And then, in early 2010, the Bloomberg education bubble burst. State Board of Regents chancellor Merryl Tisch and education commissioner David Steiner acknowledged that over the past several years, the test scores had been grossly inflated. Under previous education commissioner Richard Mills, the two
officials said, the questions on the tests had become more and more predictable, so that teachers were able to help their students “game” the tests. For good measure, the previous Albany education administration had also set the “cut scores” for determining the different levels of student proficiency too low.  When the results of the readjusted 2010 tests were announced, practically all the gains students had made since 2007 were erased. In 2009, 82 percent of students in grades 3 to 8 had supposedly performed at grade level on the math tests; but on the 2010 tests, that number fell to 54 percent. In reading, the one-year drop was from 69 percent at grade level to 42 percent.

Like the snowstorm that damaged Bloomberg politically at the end of the year, the new test numbers produced a dramatic reversal of fortune for the mayor. They raised the question of how much of a bang the city had gained for the billions of dollars in extra education spending by the administration. Certainly there were modest improvements in student learning during the Bloomberg years, but there was also modest improvement in the last few years of the old Board of Education (though this is rarely discussed). It seems that Bloomberg had had it right in his first education speech when he noted that there was no correlation between the amount of money spent on schools and higher student achievement.

Bloomberg’s administration tried to put the best face on the news. It was true, Joel Klein conceded, that the extent of student gains in recent years had been much exaggerated, but it was still true that New York had done better than the state’s other big-city districts. After boosting the city’s annual education budget by $11 billion, the Bloomberg administration was effectively saying, “We’re better than Buffalo.” That isn’t much of a legacy for a once-upon-a-time would-be presidential candidate who had put his education accomplishments at the top of his political resume.

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The Money Problem

When Bloomberg fought and won control of the schools, he said repeatedly that if people didn’t like his education policies, they could vote to fire him in the 2005 election and pick a new education CEO. When asked how New Yorkers who didn’t like what he was doing in the schools might express their concerns after Election Day, Bloomberg quipped, “They can boo me at parades.”

Not a bad quip. But it exposes what, aside from the policy failures, is the most discomfiting aspect of the Bloomberg mayoralty: the mayor’s use of his own personal resources to buy himself not only political power but also political peace. In a manner unparalleled in American history, Bloomberg in total spent in excess of $300 million to secure office three times from an electorate that numbers fewer than 4 million people (and of which only a third actually participate).

That is one issue. The other has to do with the way Bloomberg spent tens of millions of dollars annually between elections to make sure that not too many influential New Yorkers would risk criticizing him. Mayor Bloomberg’s predecessors, from Ed Koch to Rudy Giuliani, had also been tempted, and had at times given into the temptation, to use the power of incumbency and control of taxpayer funds to reward allies and punish enemies. The difference is that Bloomberg was able to channel his private philanthropic giving each year to hundreds of the city’s arts and social-service groups with the reasonable expectation that the gratitude these groups felt to their patron would extend to their patron’s political causes. At the very least, it would make the groups and their influential boards of trustees think twice before criticizing the mayor’s policies.

The vehicle for Bloomberg’s gifts was the Carnegie Corporation. During the 2005 election year alone, Bloomberg donated $20 million to Carnegie, which in turn distributed the mayor’s largesse to 400 arts and social-service groups in gifts of $10,000 to $100,000. Officially, the donor to Carnegie was listed as “anonymous,” but as New York Times reporter Sam Roberts pointed out, all the groups were aware that the generous benefactor also had a day job at City Hall. “That Mr. Bloomberg is the source of the Carnegie contributions has long been an open secret and cannot help but benefit the mayor politically,” Roberts wrote.

There has never been a wall of separation between Bloomberg’s private patronage and his political machine. Bloomberg’s first deputy mayor, Patricia Harris, now also serves as head of his private foundation and monitors the hub, or network, for this intersection of business, politics, and arts groups. The city’s Conflicts of Interests Board, nevertheless, didn’t regard this dual role by the deputy mayor as troubling.

The breadth of the mayor’s philanthropy proved to be a brilliant political strategy. When there was some slight pushback in April 2007 to one of Bloomberg’s new education-accountability policies, 100 “prominent community leaders” suddenly mobilized on the steps of the education headquarters to support the mayor’s initiative. Most of those leaders represented arts or social-service groups that were also getting private charitable contributions from the mayor.

Other groups that benefited from Bloomberg’s private largesse sent dozens of their employees to testify in favor of killing term limits at City Council hearings. On the other hand, when a widely respected organization like the Center for Arts Education publicly objected to how arts funds were distributed to the schools, the group found out that its annual Carnegie Corporation grants were cut by 75 percent.

One of the most dramatic examples of how Bloomberg’s wealth changed the city’s political life was in the transformation of the Reverend Al Sharpton from racial arsonist during the previous 15 years to statesman in the Bloomberg era. It would be nice to think that Sharpton’s new civility and cooperation with several Bloomberg projects took place because Sharpton finally came to appreciate the genius of American democracy. But as Sharpton joined the mayor’s network of friends, a trail of money suddenly appeared going either directly to Sharpton from Bloomberg’s charity, or from other sources close to Bloomberg. In 2007, Sharpton’s political arm, the National Action Network, received a grant of $110,000 from another Bloomberg-funded group, the Education Equality Project. And the Daily News’s Juan Gonzalez revealed that Sharpton’s group received another $500,000 gift just as he faced a $1 million lien for unpaid back taxes.

Bloomberg’s ability to buy off potential critics partially explains why the illusion of his managerial competence and reputation as the “education mayor” lasted for so long. All the mayor’s billions, however, couldn’t protect him from the consequences of last year’s crash of the city’s test scores or his malfeasance during the Christmas weekend snowstorm.  Thus the question of the mayor’s legacy is now finally open for serious debate.

Thanks to his concentration of wealth and power, Bloomberg was able, with the aid of a sometimes supine press, to present his personal policy obsessions as having been endowed with the force of historical necessity. Thus, when he set his sights on a West Side football stadium that would have produced massive traffic tie-ups in the center of Manhattan, the congestion that would have resulted wasn’t considered an issue. When he moved onto the national stage, a hastily conceived plan to tax cars for entering Manhattan was patched together to rebrand his mayoralty as green. But this newfound environmental consciousness had no binding claim on him; indeed, when he wanted to misdirect public monies to subvent the construction of a basketball arena on Brooklyn’s main and often impassible thoroughfare, Flatbush Avenue, the administration again dismissed problems of congestion with a wave of the hand.

Due to the structure of the city charter, the mayor has almost complete control of the streets. And Bloomberg has proved himself determined to create a new streetscape—closing down half of Times Square to vehicle traffic with plans to do the same for the shopping corridor along 34th Street in Midtown Manhattan. And then there are the bicycle lanes, the pet crusade of his second transportation commissioner, a former business consultant named Janette Sadik-Khan.

In Manhattan and Brooklyn, Bloomberg decreed the installation of bicycle lanes on many of the city’s heavily traveled commercial avenues. Little-used and aesthetically unsightly, the Manhattan bike lanes are so important to the mayor’s vision for the city that they were shoveled clean even as the streets of the outer boroughs were buried in the Christmas storm. Throughout the city, the lanes have made it more difficult to park, made the streets more congested, and made life miserable for truck drivers and delivery services that had to double park 20 feet from the curb to complete their rounds.

These undeniable realities do not seem to matter to a mayor who seems to enjoy imposing change on the city whether it is warranted or not. He has banned the use of trans fats in food sold in the city, expanded smoking bans as far as he possibly could, and crusaded against the use of salt. And he has broken new ground in expanding the already long list of activities for which Gothamites could be fined. Cars trapped in snowstorms were ticketed; greengrocers have been fined for “excessive lettering,” meaning that they posted their telephone numbers on their awnings. Subway riders were hit for taking up two seats even when no one wanted the seat next to them, and nature lovers were targeted for feeding pigeons in the park. If people didn’t want to be fined, said Bloomberg, they should obey the law. It was only public outrage that prevented him from placing tolls on the East River bridges, which have been free to motorists for a century or more.

The connecting tissue of Bloomberg’s policies is Bloomberg’s own whims and ambitions. After the snow-removal failure, Bloomberg insisted that John Doherty was “the best sanitation commissioner the city has ever had.” The New York Post columnist Michael Goodwin wrote: “In his bubble, that’s self-evident. If the sanitation man wasn’t the best, the self-declared best mayor would not have appointed him.”

When Michael Bloomberg leaves office in 2014—assuming he leaves office in 2014—the city will be saddled long into the future with the massive borrowing and school spending he required to maintain his political reputation. Citizen Bloomberg will have a significant role in how Mayor Bloomberg is judged. Already the master of an expanding media empire, he is now setting up his personal charitable foundation, which may rival the Gates Foundation in financial assets. That foundation will no doubt have the resources to place the Bloomberg legacy of debt, boondoggles, and bicycle lanes in the best possible light.

About the Authors

Fred Siegel is scholar in residence at Saint Francis College and is a contributing editor to City Journal, as is Sol Stern.